Please Refer to the Following Data Which of the Following Statements Is a Valid Conclusion Based

question 46

Multiple Choice

Please refer to the following data: $\begin{array}{|l|r|r|r|r|}\hline & 2017 & & 2016 & \\\hline \text { Rollar amounts in millions) } & \text { Amount } & \% \text { of total } & \text { Amount } & \text { \% of total } \\\hline \text { Revenues } & \$ 6355 & 100.0 \% & \$ 4920 & 100.0 \%\\\hline \text { Cost of sales } & 3370 & 53.0 \% & 2200 & 44.7 \% \\\hline \text { Gross profit } & \$ 2985 & 47.0 \% & \$ 2720 & 55.3 \% \\\hline \text { Expenses: } & & & & \\\hline\text {Sales and marketing expense }&\$ 675 & 10.6 \% & \$ 580 & 11.8 \% \\\hline\text { General and } & & \\\text { administrative expense } & 410 & 6.5 \%&425&8.6\%\\\hline \text { Research and } & & \\\text { development expense } & 470 & 7.4 \%&390&7.9\% \\\hline \text { Other expense } & 400 & 6.3 \% & 695 & 14.1 \% \\\hline \text { Total expenses } & \$ 1955 & 30.8 \% & \$ 2090 & 42.5 \% \\\hline & & & & \\\hline \text { Profit before tax } & \$ 1030 & 16.2 \% & \$ 630 & 12.8 \% \\\hline \text { Income tax expense } & 230 & 3.6 \% & 210 & 4.3 \% \\\hline \text { Profit (loss) } & \$ 800 & 12.6 \% & \$ 420 & 8.5 \% \\\hline\end{array}$ Which of the following statements is a valid conclusion based on this data?

• A)Profit in 2017 increased 12.6% over the prior year.
• B)Profit in 2017 went down because gross profit as a percentage of sales revenue declined over the two year period.
• C)Profitability in 2017 improved greatly,as profit increased significantly as a percentage of sales revenue.
• D)Profitability in 2017 took a dive as selling and general expenses increased by 30.8%.

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Definitions:

Cost of Goods Sold

The exact costs incurred in the creation of a company’s sold goods, including the expenses for materials and labor.

Average Inventory

An estimation of the amount of inventory a company typically holds over a specific period, calculated as the average of the beginning and ending inventory.

Net Income

The company's net income, calculated by deducting all costs, taxes, and losses from its total revenue.

Profit Margin

A financial metric showing the percentage of revenue that exceeds the costs of goods sold, indicating the profitability of a company.